agreed with Zeev, but he forgets to digress on followups
a 30% RealEstate decline would send the US economy into a depression
many people would walk away from their homes and mortgages
exactly that, walk away
they have already begun, in small, very small numbers
he also vastly underestimates the effect of extended equity lines of credit, second mortgages, etc
consumer purchasing power has been underwritten by this source of capital for several years now
it will soon go away completely
real estate cycles persist because of forced selling
this is a market like any other, subject to momentum
when layoffs accelerate later, then the next stage of economic deterioration engages
REAL ESTATE IS THE MOST IMPORTANT SUPPLY OF CAPITAL FOR CONSUMER SPENDING NOW
the great majority of Americans live well over their means
the links are among real estate, consumer spending, corp profits
this will completely unravel over time, slowly, inexorably
we will witness the DECLINE OF AMERICAN CAPITALISM
the lost purchasing power will cascade
first lower revenues and earnings for companies
then more layoffs, lower stock prices
more dollar selling, more housing sales
the real estate market is a critical component to the VICIOUS CYCLE
90% of Americans will be utterly shocked at the chaos
no asset group will be spared
no asset group has refused to participate in the bubble economy
no asset group has been overlooked by the public for abuse of credit
"party til you drop, dude"
this is the American theme of the late 20th Century
get ready to drop, dude
/ jim |
